Homebuyers can borrow at 0% downpayment!
Welcome to this week's roundup! I'm your host Nagaraj Annaiah, and this is where you get all the details on the hottest new developments in the world of Bay Area real estate—from first-time homebuyers to mortgage rates, and everything in between. Let's get started.
I'm excited to see California taking steps to make it easier for first-time homebuyers to get into the market.
It's no secret that buying a home is an expensive venture, but now, there are more options than ever before for people who want to buy a home.
In particular, I'm interested in this Forgivable Equity Builder Loan program because it's great for those who want to buy a home but don't have the cash for a down payment.
The loan provides forgivable loans to homebuyers for up to 10% of the home’s purchase price, which means that you can buy a house and only repay part of your loan if you stay in the home for less than five years.
I think this is going to make a huge difference in the lives of so many people, and it's going to help us build a stronger economy.
The California Association of Realtors (CAR) recently released its first quarter report, which shows that only 24% of California households could afford to purchase the $797,000 median-priced home during the first quarter of 2022. That is down from 27% in the first quarter 2021.
The news comes as a surprise to many who were expecting interest rates to drop and make homes more affordable. But it's not all bad news: The report also shows that despite affordability challenges, California remains one of the top states for housing.
STORY 2: Homes can protect you from rising inflation
There's lots of talk about mortgage interest rates, and it can be hard to make sense of it all. But one thing is clear: if you're thinking about buying a house, now's the time to do it.
With inflation at 8.5%, you can borrow money today at 5% and pay it back a year from now with dollars that have devalued by 8.5%. That means your loan will cost you nothing after inflation. And if the market's wrong and the pace of inflation continues the same way until next year, you'll make a handsome return on your mortgage.
It's no secret that the housing market is in a bit of a slump lately. People are nervous about buying, and they've got good reason to be: if you buy now, will your home become worthless when the economy crashes?
The short answer is no—homes retain their real value during high inflation and have actually done better than most other physical assets over time. But what about if you have a job you can manage, and you don't need to move anytime soon? Shouldn't that make a difference?
Well… maybe not. If you're worried about buying because of inflation, don't be! Wall Street has misjudged asset prices and inflation. If it didn't, we would see bond and stock prices crash and soar all the time. Just think how well the stock market has done since Trump was elected president (even though most experts predicted it would crash).
So even if inflation drops as predicted, interest rates on fixed-rate mortgages will likely decline as well. This means you should be able to refinance your 5% mortgage at a lower rate and monthly payment. If inflation exceeds expectations, you’ll be ahead of the game.
STORY three: 13,000 Bay Area renters could be displaced in coming months
Bay Area families are having a hard time finding housing.
In the last few years, the US housing market has seen a huge spike in prices and a decrease in supply, making it even harder for low-income families to find the right place to live.
Now, things are getting even worse. Thousands of renters across the Bay Area could be displaced in coming months as landlords start evicting tenants who can't pay their rent anymore.
The state emergency rental assistance program, designed to help struggling renters during the global health crisis, closed to new applications on April 1. Since then, thousands of people have been denied aid for various reasons. The Bay Area News Group estimates that 13,600 families have been rejected from receiving aid since April 1. And this number will continue to rise as more applications are denied over time.
With rents already so high and so many people struggling with housing costs, these evictions could have devastating consequences for many families, including children who may end up homeless, because their parents were evicted from an apartment where they were living together as a family unit!
Welcome to the Yo-Yo Economy!
It's been a rough week for the mortgage market. On Wednesday, May 4th, rates reached their highest levels in more than a decade. Then on Thursday, May 5th, they reached their lowest levels of the week.
And before we knew it, we were back to where we started: with rates at their highest levels in more than a decade. The volatility was in response to various Fed announcements and bond market movements.
Some analysts say this is a sign that rates are finally stabilizing and could head lower soon, while others think it's just another blip on the screen. It seems like we can't take anything for granted anymore! It will continue to be Yo-Yo!
Ayyo Rama! Holy Jesus! Allah Bachaye!
In real estate, don't lose your nerve!
Recently, I was helping a homebuyer who was about to close on a property.
On the day of funding, one home buyer had a small emergency at home. He panicked and was about to cancel the property transaction he had already made.
I conveyed to the homebuyer that he should not take action based on one small incident. He should assess the situation on the whole and go back to the primary reason why he was buying the property.
The buyer came back the next day, apologised, and went ahead with the property transaction.
The lesson from this is to never make decisions when faced with small emergencies. It is best to wait, think, and then make a decision instead of being impulsive and regret later.
It's a fact of life that things happen. But we should be prepared for such small emergencies.
Good news! Home prices aren't as crazy anymore!
It’s been a crazy month for real estate in the Bay Area, but I am here to tell you that you can still get good deals.
My client recently purchased a single-family home in Blossom Hill, San Jose for $1.44 million. This property was listed at $1.38 million, and we were able to act fast and sign the deal.
The housing market in the Bay Area has been slowing down lately. Even townhomes are not going for crazy values like before. Even though prices are still high compared to other parts of the country, there is still room for negotiation if you know what you’re doing!
If you have any questions or would like help buying or selling your next home, feel free to call or text me.
True integrity in real estate!
In the mortgage industry, I've seen clients get better rates from other lenders and switch to them, only to regret it later. I've seen clients who don't care about interest rates at all—they just want to make sure they're getting the best deal possible. But the best clients are those who value relationships more than short-term material gains.
I found such a dream client last week. After accepting an offer from a vendor, this client got a better rate from another lender. But he refused to take it because he valued his relationship with his existing vendor. He didn't even care about interest rates—he wanted to make sure that he was working with people he could count on! He valued our relationship more than the extra few bucks per month on his mortgage payment. That's integrity! I'm glad I could make that connection with my client.
There you have it. If you are planning to buy a house, buy now as the hard data supports it. And if you are selling a home, watch this video first. I show you seven steps to selling a house, so that you don't end up losing on real estate.
Thanks for watching. Be sure to like and subscribe to my channel. I'll see you again next week! Until then, keep your frown upside down.